To pay or not to pay Non-profit board members? Let’s raise the question

To pay or not to pay non-profit board members? For some in the world of civil society governance, that is not a dilemma. It is a common and unquestioned practice to expect that NGO board members do voluntary work. It is time to question this.

I have been discussing this issue with colleagues all across the non-profit sector and more recently on an online meeting of the “Re-inventing INGOs“, a small but diverse group of professionals that has been reflecting for over a year on improving the possible scenarios for the future of this sector.

There are different reasons made against paying board members. To ensure independence and to avoid conflicts of interest are among the top arguments. There is also an unspoken idea that voluntary work symbolises “doing good“ and that this is quite central to what NGOs are supposed to be: “do-gooders.

I am not convinced. Independence is not based upon payment or the lack of it, but upon mandate, the procedures, the checks and balances and ultimately, character. A self-assured outspoken board member will speak up and do her work according to her mandate, irrespective of whether she is paid or not. It is also true not everyone behaves that way and I have also seen cases in which some prefer to protect their contracts and chose milder approaches than to speak up — even in board-like settings like expert committees.

Not paying does not isolate people from conflicts of interest. It may actually attract them. It is not the payment that creates a conflict of interest but the board member’s other activities, so doing voluntary work hardly changes that. More importantly, otherwise interested and engaged board members who are not wealthy may need to keep or seek income generation activities that are at odds with their board functions. In these cases, paying them for their time would even make it easier for them to avoid conflicts of interest.

Let’s look at it from a different perspective. What is the profile of the likely candidates to become voluntary board members of NGOs? Usually, it is wealthy individuals or at least people with enough secured income to enable taking on the task: retired people with enough wealth and time in their hands. This already rules out quite an amount of talented people around the globe with the vision, experience, skills and strengths needed to be a board member but lack the wealth or the time to take on it.

When looking for commitment to an organization, lack of payment may be a barrier: do we really want people putting in their “remaining“ time into our initiative? It is quite true that the reputational benefits from board membership may be a good “payback” for many individuals. This may help fuel their businesses, give access to interesting networks and visibility. Taken to the extreme, this may be dangerous and the crossing-line is thin. Isn’t that close to being an incompatibility “between the duties and demands of their position and their own private interests” (the Transparency International definition of conflict of interest) that we wanted to avoid in the first place?

Different organisations will require different governance structures, which in turn define different roles for their boards. In differentiating, we may find situations in which paying may make sense. For example, some membership organisations may need a strictly internal board to ensure representation and legitimacy in decision-making. With representation being part of the membership arrangement, paying may not be adequate. Other organisations may be so small that the range of attention and effort needed by board members is proportionally little. Lack of budget may also likely to be an issue. In these cases, there is a clear case for not paying.

However, paying board members becomes more logical for organisations needing external board members or those with a high volume of work required , and more so when it is a board with oversight functions. This is the case of all international NGOs (even those with membership, I would argue).

There can also be abuse, of course. I know of an organisation that looks like a civil society NGO but operates like a private sector consultancy, paying its board members significant amounts of money. The problem here is not the payment, but the board’s structural lack of accountability.

I wonder whether the way NGO boards operate has an impact on their performance. Are the expectations and demands on the job lower for unpaid board members? How to compare? Finally, doing-good requires as much professionalism and skill as profit-making. Do we make less-good by paying our board members?

In certain countries, board payments can determine the type of liability board members are subject to. Greater liability doesn’t rule out the option, though. It is not hard to find ways of remunerating non-profit board members that are reasonable and transparent to all stakeholders, a remuneration that is restricted to the time involved, by results and actual participation, for example. There is also no need to “go overboard“ and exceed the budgetary possibilities of a non-profit. I would be happy to hear from reader’s accounts of interesting examples.

My concluding thought is that not paying board members in NGOs can be a waste, above all a waste of potential talent, perspective and experience. Quite frankly, I see it as a way to exclude people and a subtle way to avoid diversity. I am not saying that paid board members is a panacea, but that we are not achieving much by not paying. In searching for ways to improve management and results within NGOs let’s consider this issue as part of the package.